Federal Government Announces 7% Pension Increase, Issues Official Notification

Islamabad: The federal government has officially announced a 7 percent increase in pensions for pensioners and issued a formal notification stating that the revised rates will take effect from July 1, 2026.

According to the Ministry of Finance, the increase will benefit millions of civilian and military pensioners across the country.

The Office Memorandum states that the pension increase will apply to all civil pensioners, civilian employees receiving pensions from defence estimates, retired members of the armed forces, and pensioners of the civil armed forces.

The notification further states that the 7 percent increase will be calculated on the baseline pension determined in accordance with the Ministry of Finance’s directives issued on January 1, 2025, July 7, 2025, and August 5, 2025.

The Ministry of Finance said the increase will also apply to government employees who retire on or after July 1, 2026.

The document adds that the 15 percent pension increase granted on July 1, 2022, and the 7 percent increase approved on July 7, 2025, will continue to remain applicable for employees retiring on or after July 1, 2026, in accordance with existing rules.

According to the notification, the latest increase will also apply to family pensions, pensions under the Pension-cum-Gratuity Scheme 1954, the Liberalized Pension Rules 1977, pensions granted under the Central Civil Services (Extraordinary Pension) Rules, and Compassionate Allowance.

The Ministry also clarified that where a pension is shared between the federal government and another government or institution, the additional amount will be paid in the same proportion.

However, the notification specifies that the 7 percent increase will not apply to the Special Additional Pension granted in lieu of the pre-retirement orderly allowance or to the monetized value of a driver or orderly allowance.